a reply to:
Alien Abduct
Don't know about other countries, but in the USA, market price is not a true market price. Market price is defined as the price point that provides
maximum income for the producer in a marketplace where the purchase of the product is optional and where competition is possible. Neither of those
requirements satisfy electrical power distribution. Electricity is a necessity for a home to be considered "habitable" and the logistics of operating
more than one grid, each operated by a separate distributor, is simply not practical.
So we have a situation where the product is a requirement for habitation and only one supplier can exist. Under that scenario, "market price" would be
based on whatever the power company could possibly get for its power... $10/kWh, $100/kWh, $1000/kWh... whatever. Because of that, electrical
distributors are regulated by the government to restrict their pricing to their costs, plus a reasonable profit. If costs go up, the power companies
can ask for (and generally receive) permission to raise their prices.
Remember that in order to reduce prices, the power company has to ask for and receive permission to lower their prices. That just doesn't happen
unless enough people start complaining to get a government agency to actually do something... and that takes a LOT of people!
If anyone wants to wade through the legaleeze, it is the
Public Utility
Regulatory Policies Act of 1978, H.R.4018 in the 95th Congressm 1977-1978. The section relating to home power production is codified in
16 USC § 824a–3 - Cogeneration and small power production. Remember when reading that
anyone who owns a grid-tie system is considered a "small power production facility."
The gist is this: All electrical power distributors are considered "natural monopolies" and required by law to produce power for cost plus a
reasonable profit. They cannot refuse to sell power to anyone based on any metric except payment. They cannot refuse to purchase power from anyone,
and they cannot pay less for that power than they would have paid otherwise. Sounds good, right?
Here's the problem... older meters were unable to determine when the power sold back was produced. Electrical power from a power plant is sold not
just based on how many kWh is produced, but also based on
when it is produced. Power produced during the wee morning hours in springtime
weather costs much, much less than power produced during the daytime in 100-degree or sub-freezing temperatures. It's not a minor price fluctuation,
either... off-peak production can be as low as 10% or less of peak production. The power plants have special meters that calculate and log all of this
information, and that equipment is so expensive as to be completely unavailable to the general public. It can cost millions of dollars... a drop in
the bucket when talking about a billion-dollar production, but nowhere near possible for the average homeowner.
So, when someone sells power back to the utility company, that utility company is required to buy it at their normal rate... but without proof of when
it was produced, they use the lowest rate. Some smaller utilities actually just use net metering (that's where you simply get charged for however many
kWh you wind up using after subtracting what you produced), but larger utilities? Nope, they pay their lowest rates and you pay that contract price
for what you use.
Modern smart meters have the ability to log when power is produced... but they are under sole control of the utility. They simply do not log the exact
times. They do, however, log how much power goes in as opposed to how much power goes out. It's nice to have complete control over the monitoring
equipment.
The big change came when so many people were producing power from their homes that it was starting to affect the utilities' bottom line. That's when
the push for "green energy" came about. A power company could build power generation stations that, once built, cost almost nothing to produce power.
The cost of building these facilities was covered by government subsidies, so there was no major initial cost to be depreciated. Thus, utilities could
now cite that extremely low power generation to justify even lower buy-back pricing.
At the same time, those green energy plants are about as unreliable as they could possibly be. They require standard backups to produce power on
demand. Thus, the contract rates are set based on the most expensive costs. As fuel costs have skyrocketed, the price differential between power
produced and power sold back is becoming huge.
All because the tax money we all paid in went to subsidize those green projects, not to increase power... it all happened so utilities did not have to
pay as much for power produced by individuals. We paid big bucks to ensure that we would get paid less.
Anyone get that?
We paid big bucks so we could be paid less for power we produce! And we get no real boost in available energy or
decrease in power costs due to that trade-off.
That's the problem.
TheRedneck